Editor's Note: Greetings! This week, we presented the 2023 year-end review, which serves as an insightful retrospect of the advancements in the China-EU economic and trade sectors over the past year, as well as a detailed look at our strategic priorities and accomplishments. As we send out our final newsletter of 2023, CCCEU wishes you a warm and joyful start to the new year

▶︎ Focus

The review is approximately 2500 words long and takes about 9 minutes to read.

The global political and economic landscape is undergoing significant changes. As two major forces in the world, the relationship between the European Union (EU) and China is not only directly related to the interests of their peoples but also closely connected to the prosperity and security of the world. The year 2023 marks the 25th anniversary of the establishment of the EU-China leaders' meeting mechanism and the 20th anniversary of the establishment of a comprehensive strategic partnership between the EU and China. Looking back at this year, the tone of steady progress in bilateral economic and trade relations between China and Europe has been strengthened. This is mainly due to the steady and strong resilience of the economic symbiotic relationship, the complimentary from the continuous optimization of trade structure, the vitality of business entities maintaining a positive trend, and the potential from the continuous expansion of cooperation.

I. Resilience: A Strong Economic Symbiotic Relationship

Over the past 20 years, China-EU trade has grown rapidly, making them each other's second-largest trading partners and forming a stable and strong economic symbiotic relationship. Since 2023, China and the EU have fully resumed interactions at all levels, with comprehensive dialogues and cooperation in various fields unfolding. From leader-level exchanges to strategic, economic and trade, digital, environmental and climate, and cultural dialogue mechanisms, along with more than 70 working-level dialogue mechanisms, an institutional framework has been established for the development of bilateral relations. Under the guidance of all-encompassing and multi-level dialogues and cooperation, bilateral trade volume has remained stable and even shown positive trends. According to data from China's General Administration of Customs, from January to November 2023, the total trade value between China and the EU was 5.03 trillion yuan (RMB) / 704.2 billion euros. This includes 3.22 trillion yuan / 450.8 billion euros in exports to the EU and 1.81 trillion yuan / 253.4 billion euros in imports from the EU. Additionally, according to recent data from China State Railway Group Co., Ltd., as an important trade corridor between China and Europe, the China-Europe Railway Express ran a total of 16,145 trains and transported 1.749 million TEUs from January to November 2023, an increase of 7% and 19% respectively compared to the same period last year, exceeding the total transport volume of 2022.

II. Complementary: Continuous Optimization of Trade Structure

Amidst a complex and severe international situation, China-EU economic and trade cooperation has steadily progressed with continuous structural optimization, demonstrating strong resilience and vitality. Substantial achievements have been made in fields such as technology and green industries. The interdependence of high-tech product trade between China and Europe has deepened. In areas like computer/office equipment, electronic communications, electromechanical products, and chemical products, China has become the EU's largest source of imports. In the fields of electronic communications and instrumentation products, China is the EU's largest export market. In the green sector, with green transformation as a common focus for China and the EU in addressing climate change, trade in green products such as lithium batteries, new energy vehicles, and photovoltaic components has grown rapidly. In the post-pandemic era, with the slow recovery of the world economy and the energy crisis triggered by the Russia-Ukraine conflict, the similar needs of China and the EU in green industry and clean energy technology development have created a huge complementary space in their economic and trade relations, helping to elevate China-EU economic and trade cooperation to new heights under the new circumstances.

III. Vitality: High Enthusiasm in Corporate Cooperation

From the perspective of business entities, Chinese and European companies have maintained a positive momentum with high enthusiasm for cooperation. From January to September 2023, France and the Netherlands, as major sources of European investment in China, saw their direct investments in China increase by 121.7% and 32.6% year-on-year, respectively, demonstrating strong confidence in investment development in China. European companies also actively participated in major Chinese exhibitions such as the China International Import Expo (CIIE), China International Consumer Products Expo (CICPE), and China International Fair for Trade in Services (CIFTS). Chinese companies' confidence and enthusiasm for investing in Europe remain strong as well. The European Union is a significant overseas investment destination for Chinese enterprises and has the highest proportion of investment stock among developed economies. Despite the evolving investment fields, methods, and entities following market trends, the commitment of Chinese companies to deeply engage in the EU market remains unchanged. President Xi Jinping emphasized that China regards the EU as a key partner in economic and trade cooperation, a priority partner in technological cooperation, and a reliable partner in industrial chain and supply chain cooperation, aiming for mutual benefit and joint development. The prospects for China-EU economic and trade cooperation remain broad.

IV. Potential: Continuously Expanding Areas of Cooperation

Over the past 20 years, China and the EU have formed a comprehensive, multi-level, and wide-ranging cooperation pattern. As two important markets internationally, China and the EU have enormous potential for cooperation in new areas such as green economic development, digital transformation, and services industry, as well as in jointly addressing global challenges. For instance, in green economy, the EU has a globally leading green transformation system driven by policies, technological innovation, and carbon trading mechanisms, supported by a series of standards, while China has set "dual carbon" goals and its new energy industry is extremely vibrant. In terms of the digital economy, China and the EU have similar strategic goals in digital economic development and vast complementary spaces, with the EU possessing a comprehensive digital regulatory system and China showing significant performance in digital application and industrialization. In the services industry, the rapid growth of service trade between China and Europe, post-pandemic recovery in exchanges, and digitizable services provide new momentum for China-EU service industry cooperation. Additionally, at this stage, both sides have completed the public notification of the second batch of items under the China-EU Geographical Indications Agreement, adding mutual recognition and protection for an additional 350 landmark products, and have led the development and update of the "Common Ground Taxonomy Table," injecting new vitality into China-EU economic and trade cooperation.

However, in the context of profound changes in the international situation, issues such as the COVID-19 pandemic and the Russia-Ukraine conflict have had a deep impact on both China and Europe. In recent years, the development of China-EU relations has also faced challenges such as "de-risking," "reducing dependency," and being labeled as "systemic rivals." As Fu Cong, the Head of the Chinese Mission to the EU and Ambassador Extraordinary and Plenipotentiary, pointed out in a recent interview with the Global Times, despite differences in historical and cultural traditions and social systems, China and Europe are at different stages of development and highly complementary economically, with cooperation far outweighing competition, and consensus far outweighing differences. It should be recognized that China-EU relations are now at a new starting point. As China and Europe reach consensus in more areas, bilateral economic and trade cooperation is expected to overcome challenges and reach new heights.

Over the past year, with and the joint efforts of all our member units and colleagues, the China Chamber of Commerce to the EU (CCCEU) actively organized significant economic activities, protected the legal rights of Chinese enterprises in Europe, published annual flagship reports, enhanced its domestic and international communication impact, and strengthened internal mechanism building to improve professional management levels, achieving significant results in various aspects:

A. Building a Platform for China-EU Economic and Trade Cooperation to Serve Major Agendas

During a critical period in the development of bilateral relations between China and the EU, CCCEU has been actively creating an atmosphere of mutually beneficial cooperation. In 2023, CCCEU organized over 30 various economic and trade dialogues, forums, and symposiums, actively promoting the achievements of China-EU economic and trade development, enhancing mutual understanding and trust between China and the EU. It actively cooperated with major diplomatic agendas such as the China-EU Summit and high-level China-EU economic and trade dialogues, helping to stabilize and advance China-EU economic, trade, investment, and commercial relationships. CCCEU also actively established the EU-China "General Chamber of Commerce," holding two major events with our counter parter  EUCCC and creating the "EU-China Business Leaders Roundtable Dialogue" as a branded event, jointly facilitating the steady development of China-EU economic and trade relations.

B. Providing Services, Building a High-level Exchange Platform

CCCEU has always prioritized serving Chinese enterprises as its core mission, building a high-level platform for economic and trade exchanges between China, the EU, and its member states. In 2023, CCCEU meticulously organized a general assembly for all members, inviting hundreds of Chinese and European companies to participate in the China-EU Business Summit Forum, contributing ideas and suggestions for exploring cooperation in green, digital, and other fields. This event was the most attended and highest-level general assembly and summit forum since the establishment of CCCEU. Focusing on building a think tank for the business community, CCCEU co-hosted a high-level seminar with Peking University titled "Changes and Development: China-EU Economic and Trade Relations under the New Situation," which attracted widespread attention from the political, business, and academic communities at home and abroad. CCCEU actively built bridges for communication between enterprises and China-EU governments, organizing nearly 40 different types of government-business exchange activities throughout the year. It also achieved breakthroughs in interactions with high-level European officials.

C. Dedicated to Telling the Stories of Chinese Enterprises and Actively Promoting Achievements

CCCEU firmly protects the interests of Chinese enterprises in Europe, utilizing various platforms and channels such as WeChat Official Accounts, official websites, Baijiahao, Twitter, LinkedIn, etc., to voice the stories of Chinese enterprises. It highlights how Chinese businesses in Europe fulfill social responsibilities and benefit local communities. By strengthening exchanges with European local media through interviews and on-site reports, CCCEU enhances European media's understanding of China. It publicizes the vivid practice of China-EU companies engaging in economic and trade cooperation and achieving mutual benefits by releasing official data, professional reports, and news briefs. In 2023, the China Chamber of Commerce to the EU and Roland Berger jointly released the report "Building Trust, Boosting Prosperity--CCCEU Report on the Development of Chinese Enterprises in the EU 2023/2024" in Brussels. The report garnered high attention, with enthusiastic media responses and coverage by over 200 domestic and foreign media organizations, a historical high, significantly increasing the impact of the flagship report. Also, in 2023, the CCCEU's communication efforts achieved a historic breakthrough in influencing domestic and international public opinion. Incomplete statistics show that the CCCEU's events and statements have cumulatively received attention and coverage by over 1,100 domestic and foreign media and organizations since 2022.

D. Dedicated to Protecting the Interests of Chinese Enterprises in Europe and Continuing to Voice for Chinese Enterprises

CCCEU prioritizes serving Chinese enterprises as its core mission, genuinely reflecting the concerns and demands of Chinese businesses. We actively collects opinions and suggestions from member units, protects the rights of enterprises in Europe, expands communication with various EU sectors, and promotes an optimized business environment in the EU. CCCEU closely follows the progress of EU unilateral economic and trade policies such as the EU 5G Security Toolbox, the EU investigation into subsidies for electric vehicles from China, foreign direct investment screening, foreign government subsidies, the International Procurement Instrument, sustainable corporate governance, the anti-coercion instrument, banking regulation, the Net-Zero Industry Act, the Battery Regulation, and the Critical Raw Materials Act. It also monitors the dynamics of the EU-U.S. Trade and Technology Council (TTC) and legislative and cooperative developments between China and the EU in digital, green, and economic and trade sectors, genuinely reflecting the concerns and demands of Chinese enterprises and fully protecting the rights of Chinese-funded enterprises.

E. Strengthening Vertical and Horizontal Connections to Fully Expand Multidimensional Cooperation Channels

Against the backdrop of evolving geopolitical situations and new developments in globalization, CCCEU fully leverages its platform's extension and radiation effects to continuously expand its brand influence. In terms of vertical connections, CCCEU actively mobilizes the unique roles and initiatives of member state business associations, strengthening communication and coordination with them and presenting a united voice through jointly organized forums and events. Horizontally, CCCEU actively expands its contacts and cooperation with peers such as the European Union Chamber of Commerce in China (EUCCC), Japan Business Council in Europe (JBCE), Korea International Trade Association (KITA), EU-China Business Association (ECBA), and the Belgian-China Chamber of Commerce (BCECC). It also strengthens exchanges and cooperation with European think tanks and academia to promote the development of China-EU economic, trade, and investment cooperation.

In 2024, CCCEU will usher in the exciting fifth anniversary of our inauguration, which is a critical period for summarizing experience, learning from lessons and setting sail for a new start. In the coming year, We will continue to adhere to the guiding spirit of "listening to voices, providing good services, establishing a positive image, and creating China's 'golden signboard'". CCCEU will focus on serving the core interests of Chinese enterprises, promoting the development of Chinese enterprises in the EU, striving for a fair, equitable, and non-discriminatory business environment, closely monitoring the development dynamics and core concerns of Chinese enterprises in Europe, resolutely protecting the interests of Chinese enterprises in Europe, and helping to stabilize and advance China-EU economic and trade relations.

Since the establishment of diplomatic relations between China and the EU in 1975, both sides have worked towards each other to build a comprehensive strategic partnership, bridging cultural, historical, and political differences through cooperative dialogue and jointly promoting the development of globalization. Currently, as the world undergoes a major transformation not seen in a century, China-EU relations have experienced ups and downs but maintain a positive momentum of forward development. As President Xi Jinping pointed out during his meeting on December 7 with European Council President Michel and European Commission President von der Leyen, who were in China for the 24th China-EU Summit, “China and Europe are two major forces driving multipolarity, two large markets supporting globalization, and two great civilizations advocating diversity. In the current international situation marked by increased turmoil, China-EU relations have strategic significance and global impact, and are vital for world peace, stability, and prosperity. Both sides bear the responsibility to jointly provide more stability for the world and more impetus for development.” Standing at this historical juncture, China and Europe should join hands, draw on and inherit historical experiences, respect and support each other, seek common ground while reserving differences, and achieve common development. This not only directly concerns the fundamental and long-term interests of both China and Europe but also carries the common expectations of the international community.

▶︎ Hot Topics

 >>Romania, Bulgaria to partially enter Schengen after striking deal with Austria

According to Africanews, the political agreement will allow Romania and Bulgaria to join the Schengen zone by air and sea only, with further negotiations to follow on land borders, the Romanian interior ministry said Wednesday. Austria had been blocking both countries' accession to Schengen over concerns it could lead to an influx in irregular migrant arrivals in Europe via the Turkish and Western Balkan routes. The European Commission had considered both countries to be ready for Schengen accession since 2011, but EU states had blocked an agreement over fears regarding the rule of law and an increase in migration.

 >>Bloomberg: Germany expects EU aid to be supported 'in any case'

Germany expects the European Union to finalize a deal on a major aid package for Ukraine even without Hungary's support, Bloomberg reported on Dec. 28, citing German Foreign Ministry spokesman Christian Wagner. Hungary vetoed a EU funding package for Ukraine worth €50 billion at the European Council summit in mid-December. Hungarian Prime Minister Viktor Orban has long opposed support for Ukraine and maintained ties with Russia.

Speaking at a press conference on Dec. 28, Wagner reportedly said that Germany will provide Ukraine with military aid worth 8 billion euros ($8.85 billion) in the upcoming year.

 >>Conclusion of Spanish Presidency of the Council of the European Union

According to the Eurojust Website, the Spanish Presidency of the Council of the European Union will come to an end on 31 December. In the domain of Justice and Home Affairs, the Spanish Presidency has focused on enhancing the area of freedom, security and justice. Eurojust and the Spanish authorities have worked closely together over the past six months.During its Presidency, Spain has worked to strengthen the EU and continue to promote institutional and legislative development to meet the expectations of European citizens. Spain established four priorities for its term, including the reindustrialisation of the EU, the green transition, social and economic justice, and strengthening European unity.The challenges faced by the Spanish Presidency have been addressed, taking into account the proximity of the European elections and the need to close certain crucial dossiers. These include completing legislative work on Directives on key topics such as the environment, asset recovery and confiscation, and violations of the EU restrictive measures. In addition, the Council reached a general approach on the proposal on transfer of proceedings, hopefully paving the way for a successful conclusion of the legislative work on this key topic.

  >>EU Commission examines Italy's tax case against Meta

According to Reuters, an Italian tax claim against Facebook parent Meta has been escalated to the EU Commission's VAT committee for evaluation, three sources with direct knowledge of the matter told Reuters, in a test case for how the tech sector is taxed. The U.S. corporation, which also owns the Instagram, WhatsApp and Oculus platforms, faces a potential tax bill of around 870 million euros ($954 million) in Italy after Milan prosecutors launched an investigation into the company on the basis of a tax police audit. Although a modest sum for a company that brought in more than $32 billion in revenue last year, the case could have much wider ramifications as it hinges on the way that Meta provides access to services.

 >>Chinese Ministry of Commerce: China's market will have stronger "magnetic attraction" for foreign investment

In the regular press conference held by the Chinese Ministry of Commerce on 28 December 2023, spokesman He Yadong answered reporters' questions on the fluctuations in the scale of foreign investment. He Yadong said, foreign capital scale fluctuations are due to a variety of reasons, both economic factors, there are also non-economic factors. Fluctuations in the scale of foreign investment, should also view from multiple perspectives. Vertically, the scale of China's capital attraction is still at a historically high level. 2019 to 2021 China's foreign capital absorption has set a new historical record for three consecutive years, and the scale of the actual use of foreign capital from January to November 2022 has reached 1.16 trillion yuan, which is the highest level in the same period in history. Given the high base of the previous year, it is normal to see fluctuations in attracting foreign investment from January to November this year. From a horizontal perspective, global transnational investment has been in the doldrums in recent years, with the global scale of transnational direct investment falling 12.4 per cent year-on-year in 2022 and continuing to shrink in 2023. So far this year, multinational companies have come to China for inspection and negotiation, showing great interest in investing in China.

  >>Over the past five years, the annual average growth rate of global patent applications for solid-state batteries from China has been 20.8%.

According to a CCTV news, on December 26, 2023, at the Chinese State Council Information Office's regular policy briefing, a responsible official from the Chinese National Intellectual Property Administration stated that patents have played an active role in supporting the development of green technologies and future industries. They revealed that over the past five years, China's global patent applications for solid-state batteries have seen an average annual growth of 20.8%. The data indicates that in the first 11 months of this year, the exports of Chinese electric vehicles, lithium batteries, and solar cells reached 269.3 billion yuan, 419.4 billion yuan, and 289 billion yuan, respectively. The global market share of these products is also continuously increasing.

▶︎ What are experts talking about？

The European Union should do better than confiscate Russia's reserve money

Source: Bruegel

Author: Nicolas Véron

On December 14, 2023, the European Council initiated talks for Ukraine and Moldova to join the European Union, granting candidate status to Georgia.

For Ukraine, the negotiations offer vital support amid internal and external challenges while driving necessary reforms aligned with EU standards. Moldova, seeking to improve its economic status, views EU membership as pivotal, especially after the 2014 Ukraine crisis.

However, both countries face formidable hurdles ahead, including aligning numerous legislations with EU laws and addressing complex issues like transportation, market access, and energy integration, making the path to EU accession challenging.

Reviewing the World in 2023 - Where is the Path Forward for Europe's Crisis?

Source: China Institute of Contemporary International Relations

Author: ZHANG Jian

After the Ukraine crisis in 2022, Europe entered 2023 with a complex mix of concerns and hopes, aspiring to revive economic growth and strengthen its geopolitical stance against Russia. However, as 2024 approaches, Europe finds its future more uncertain.

I. Dilemma in Supporting Ukraine and Opposing Russia

In 2022, Europe achieved unprecedented unity, enacting nine rounds of sanctions against Russia. Entering 2023, the EU introduced two more rounds of sanctions and increased its aid to Ukraine, nearing a total of 90 billion euros. In June 2023, European Commission President Ursula von der Leyen announced a plan to provide Ukraine with 50 billion euros in grants and loans from 2024 to the end of 2027. However, the situation has not developed as Europe had hoped.

II. Weakening Franco-German Axis Intensifies Integration Challenges

As initiators and promoters of European integration, France and Germany are core forces of the EU. However, in recent years, the Franco-German axis has continued to weaken. In 2023, both countries faced intensified economic, social, and diplomatic difficulties, leading to a cooling of bilateral relations and increased contradictions. This has resulted in rising internal disputes within the EU, causing a loss of direction in its overall development.

III. Risks in 'De-risking' Strategy

'De-risking' became a buzzword in Europe in 2023, shaping the main narrative of the EU's economy, trade, and foreign relations. In March 2023, von der Leyen first introduced this concept, which was subsequently widely adopted by the EU and the United States, replacing the outdated 'decoupling' rhetoric. Fundamentally, Europe's so-called 'de-risking,' while negating 'decoupling,' is actually a variant of it, reflecting an exclusive mindset based on value judgment biases. European economies have benefited from economic globalization and are highly dependent on global markets. Artificial and capricious 'de-risking' essentially disrupts the efficient global division of labor and industrial chain systems, weakens global cooperation and unity, and harms the EU's own economic and social development. So far, Europe has not become better off due to 'de-risking,' but rather worse. This shows that if 'de-risking' strategy is based on narrow value judgments and so-called systemic competition, it is certainly a misdirection that only brings greater risks. In 2023, Europe continued to strive to build European sovereignty and advance strategic autonomy, aiming to "control its own destiny" amid global geopolitical changes.

Please note: the English version of this issue is slightly different from our Chinese one. The views and opinions expressed in this article do not necessarily reflect the official position of the CCCEU.

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